While we are all napping: Trading in MSRs hit $1 trillion.

According to recent reports:

MSR trading volume this year is on pace to meet or exceed last year’s robust mark, when some $1 trillion in MSRs exchanged hands — then fueled by the spike in interest rates. The trading volume of MSRs so far this year is on pace to meet or exceed last year’s robust mark, when some $1 trillion in MSRs exchanged hands — then fueled by the spike in interest rates.

So unless you are a finance nerd like me, you don’t know or care. But if you are receiving statements from companies with whom you never did business and now claim to “own your loan,” you might want to pay attention.

WHAT ARE MSRs?

MSR is an acronym for a false label which is to say Mortgage Servicing Rights. Everyone thinks that the reason they have value is that the fees received by companies who are designated by lawyers (not under oath) as “servicers” are so high that it is the best thing since sliced bread.

You are meant to believe that. It is a big lie, and it serves several hidden purposes. The first is that it implies the acronym is accurate. Yet Mortgage Servicing Rights do not relate in any way to the receipt, processing, or accounting of payments received from homeowners.

It does not relate to any mortgage lien, note, debt, or payment. The MSR only arises theoretically AFTER the deal is over and the homeowner is gone.

The second is that this has anything to do with “servicing,” as we common folk understand that term. And the third is that there are any rights relating to anything that is included within any “MSR.”

SO WHAT ARE MSRs?

An MSR is a mental construct that Wall Street used as a reference point in order to create something that other people would buy or trade based solely on market value. If there are any security analysts out there, this market value is not based on any fundamental book value, earnings, or prospects that are legally recognized.

It is based on a set that an illegal scheme will succeed and that the “Owner” of the “MSR” will get a share of the money generated by the scheme.

WHAT IS THE SCHEME?

The scheme is the unlawful forced sale of homestead property. If the foreclosure is successful, then the holders of MSRs will demand payment out of the proceeds of the sale (right, not the “creditor” that everyone was talking about).

WHY WOULD ANYONE ALLOW THAT?

Because the script for the scheme is that “servicers” are “advancing” money to “holders” of “certificates” to make up for payments that homeowners stopped. Like all shows, the script is about fantasy. It is not real. There are no such advances. Holders of certificates get their money regardless of whether any homeowner makes a payment.

They get that money from a reserve slush fund established by the underwriting and issuing investment bank, which uses money that comes from the money investors paid when they bought certificates. So part of the money that investors (holders) are getting is their own money being given back to them as “servicer advances.”

HOW COULD ANYONE BE THAT STUPID?

I don’t know the answer to that. But it is true that these facts are expressly disclosed in the prospectuses given to the managers of stable managed funds (like pension funds). Those managers know that they are not getting a piece of property or a  piece of any lien, note, or debt.

But because of the mob mentality that engulfs Wall Street every 5-10 years, they simply listen to what they are told. All of Wall Street is interconnected. So while these funds are presented to the public as discrete independent entities, they are all run by people who come and go between the revolving doors of investment banks, issuers, traders, rating agencies, insurers, and analysts.

Under the contract with investors, the holders of certificates have no rights. So when the property is sold, the proceeds go to the putative owner of MSRs, and nobody complains because everyone is getting paid — except the homeowner.

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Neil F Garfield, MBA, JD, 76, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE COMMENTS ON THIS BLOG AND ELSEWHERE ARE BASED ON THE ABILITY OF A HOMEOWNER TO WIN THE CASE NOT MERELY SETTLE IT. OTHER LAWYERS HAVE STRATEGIES DIRECTED AT SETTLEMENT OR MODIFICATION. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.

But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 14 years or more. In addition, although currently rare, it can also result in your homestead being free and clear of any mortgage lien that you contested. (No Guarantee).

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